Gene transcription is a complex and tightly regulated process. Accumulating evidence has indicated that it was concertedly regulated by regulatory proteins, mainly transcription factors (TF), and epigenetic modifications. The role of TFs in the regulation of gene transcription has been extensively studied, but much less understood is the role of epigenetic modification. DNA methylation has been newly discovered as key controller in gene transcription too. Aberrant DNA methylation changes can cause a number of human diseases such as developmental diseases (ICF syndrome, Prader-Willi and Angelman syndromes etc), aging related diseases (i.e. Alzheimer's disease), heart disease, diabetes, and autoimmune diseases. Moreover, large amount of evidence implicated that DNA methylation is a key player in cancer development. The overarching goal of this project is to develop a set of novel statistical tools to identify the differentially expressed DNA methylation patterns and understand the roles of DNA methylation in gene transcriptional regulation. In particular, we intends to achieve three scientific goals: 1) improving the sensitivity and specificity in identifyng the single nucleotide based DNA methylation change; 2) bridging the research gap in DNA methylation analysis and gene expression analysis by using the sufficient dimension reduction model; 3) developing a new statistical framework to overcome the grand challenges in epigenetic analysis and build the mathematical underpinning. With the rapid development of next generation sequencing technique in the past decades, where large amount of epigenetic and genomic data are routinely collected, processed and stored, we believe our efforts will not only extend our understanding of the regulatory mechanism in gene transcription but also lead to (1) fundamental advances in DNA methylation analysis, (2) development and refinement of technology for the rapid and continuous identification of gene regulation related DNA methylation cites, (3) prototyping of the epigenetic chip for human intervention of certain disease.